Chrysler Leads 6.2% Decline in Jan. Car Sales

U.S. auto sales fell an estimated 6.2% in January, led by a 16% drop at the troubled Chrysler Group, but analysts said Thursday that the declines were expected, given the slowing economy and the abnormally torrid pace of vehicle sales a year ago.

Auto sales this year are nonetheless expected to be the third-best ever, with economists predicting sluggishness for the first half of the year followed by a stronger second half.

DaimlerChrysler’s Chrysler Group, made up of the Chrysler, Dodge and Jeep brands, is swimming in red ink estimated at $1.7 billion for the second half of 2000. On Monday, it announced a drastic restructuring plan that will eliminate almost 26,000 jobs, close six plants and reduce production at seven others over the next two years.

“In January, we lost some momentum in the marketplace because of the uncertainty surrounding our recovery,” Dieter Zetsche, chief executive of the Chrysler Group, said in reporting the 16% decline. “By announcing a major portion of our turnaround plan earlier this week, we will recapture that momentum.”

Although Chrysler sport-utility vehicle sales were up, sales of trucks were down 14%, passenger cars were down 22% and minivans slumped 39% compared with a year ago. Chrysler’s overall market share fell to 13.5% from 15.3% a year ago, according to Autodata Corp.

General Motors sales fell 5.1% in January, compared with a year before, and Ford Motor Co.’s sales slid 11%.

“I don’t think it was any worse than expected. Sales have been slowing, especially for the Big Three, so it’s not a surprise,” said Rebecca Lindland, a senior analyst at Standard & Poor’s Global Automotive Group.

“We’re comparing to January of 2000, when we were in the midst of an incredible sales rate,” Lindland said.

Industry sales for the first five months of 2000 sped along at an annualized rate of more than 18 million, before slowing slightly to finish the year at a record 17.4 million.

“That’s a tough act to follow, but we expect industry sales to again run at healthy levels this year,” said Bill Lovejoy, GM’s group vice president of North America vehicle sales, service and marketing. “The industry is beginning 2001 in a different market environment than we saw in 2000, and we are making sure all of our actions are consistent with market demand.”

Industry experts expect U.S. vehicle sales this year to finish at 16 million to 16.5 million, which would make 2001 the industry’s third-best year.

Two interest rate cuts in a month by the Federal Reserve are likely to spur consumption in the weeks and months ahead, and auto makers hope for additional cuts by the Fed.

It’s too soon to see if the rate cuts will spur vehicle sales, Standard & Poor’s Lindland said. “People are tired of spending; they’re nervous and consumer confidence is down,” she said. “They’re not going to buy unless they have to. If their car leases come up, many may now buy used cars.”

Toyota Motor Corp. came in at No. 4 in the U.S. market in January, but sales were down 11.4% from its best-ever January last year.

Nissan was down 6.6% with disappointing sales of the Maxima and Infiniti G20, but Honda was up 11.1% largely on the strength of Accord sales. Mitsubishi Motors was up 10.8%, and Mazda was up 28.2%, thanks to gains by the Millenia and Miata.

DaimlerChrysler’s Mercedes-Benz division was down 10.6%, but BMW gained 5.6% and Volkswagen/Audi, which hadn’t reported official results Thursday, was estimated to be up 0.8%.